Lake George tree business overcharged after Irene, suit says

Updated 10:45 pm, Thursday, December 13, 2012

ALBANY — Claiming that a local company preyed on the vulnerable, Attorney General Eric Schneiderman's office on Thursday filed a lawsuit against Lake George-based American Tree Co. for alleged price gouging following Tropical Storm Irene.

American Tree co-owner John Stranahan called the allegations "absolutely false," and said the company would defend itself.

The suit, filed in Albany County Supreme Court, claims the company boosted fees "exponentially" for work after the devastating August 2011 storm, charging up to $10,000 per tree removal and also hitting customers with undisclosed $1,500 "emergency service call" and $1,000 "after hours" fees.

According to court documents, the investigation began with a consumer complaint in February, and ultimately uncovered 27 alleged victims.

In an affidavit, one customer said an American Tree representative visited just after the storm and said the job would cost "no more than several thousand" dollars. The company ultimately charged $49,835, including $10,000 each for three "huge" trees.

The state's Price Gouging Law prohibits unjustified price inflation of essential goods and services during an "abnormal market disruption" caused by a natural disaster.

"The tactics used, and the excessive amounts charged, by this company during a time of crisis in the community shocks the conscience," Schneiderman said in a statement. "Whether it is Tropical Storm Irene or Hurricane Sandy, our office has zero tolerance for price gouging and we are fully committed to enforcing the law."

The suit claims that American Tree "provided inaccurate 'lowball' estimates or false promises of full insurance coverage"; failed to provide written contracts as required by law; and amended pricing information on documents after they had been signed by customers.

The suit names American Tree and principals Daniel Stranahan, John Stranahan and Merwin "Skip" Stranahan. It seeks restitution and damages, disgorgement of profits for Irene-related work, plus penalties and costs, as well as an injunction prohibiting the business from engaging in illegal and deceptive practices.

In an interview with the Times Union, John Stranahan denied the charges, labeling them point-by-point as "absolutely false."

"We are a three-generation company. ... There has never once been an accusation of this kind levied against the company," Stranahan said. "We intend to defend ourselves vigorously."

He said that all work was specified and approved ahead of time by customers, and scoffed at the idea that he was going door-to-door seeking work in the days after the storm — something he is described as doing in four separate affidavits, according to the complaint.

"We don't solicit work," he said, adding that the company had to turn away post-Irene business.

Stranahan complained that the attorney general's analysis comparing tree-removal rates in the periods before and after the storm was flawed, and should instead have made comparisons to what other companies were charging during the post-Irene cleanup. He said some of those who gave testimony to Schneiderman's investigators had simply pocketed insurance settlements rather than settle their bills with American Tree.

The company filed for Chapter 11 bankruptcy in early 2011 but had emerged from it before Irene struck, Stranahan said. American Tree currently has an A-plus rating from the Better Business Bureau.